Here are the basic steps to help understand the procedures and legal acts that
are involved in acquiring a property in Portugal. It is always recommended that
qualified legal advice be sought in any purchase.
It is important to insure that any plans in the Town Hall referring specifically
to the property do physically agree with the existing construction. A property
for living purposes must have the following documentation:
a) Habitation License for property constructed after 1951 (Other documents may be required)
b) A Certified insertion in the records of the Land Conservatory
c) A detailed "Caderneta Urbana" from the Tax Office
Commercial and Industrial properties require both Points b. and c.
In the case of a rural property the following extra document is necessary which
is a detailed and an up-to-date description of the property as is named "Caderneta
Rustica". This document is issued by the local Tax Office.
It is quite normal for both Parties to initially enter into a Promissory
Contract detailing the conditions of Sale - "Contrato de Promessa de Compra e
Venda". This Contract is then legalized by registering it in the Notary Office.
This Contract is legally binding on both sides and the law requires the seller
to repay twice the deposit should he withdraw from the sale. Likewise, it the
buyer fails to complete he forfeits the total of his deposit. There are specific
laws relating to this act that a Lawyer will be able to explain.
It is often found practical for the buyer to appoint a third party such as their
Lawyer to act for them legally in the matter. A document named "Procuração
Publica" is prepared with the necessary details and then in the Notary Office
this document is signed and registered by the Notary. This official document can
also be created in the Portuguese language outside Portugal in a Portuguese
Consul in a foreign country, or, in a Notary in the language of the country
concerned. In the case of the latter the document must have the Seal of the
Notary and an Apostil attached. An official translation into the Portuguese
language will later be necessary.
Every buyer is required to obtain a Fiscal Number from the local Tax Office (Finanças).
Prior to act of purchase, the purchase will usually be subject to a State
payment named "Imposto Munipal Sobre Transmissões - IMT" which replaced the
originally known Tax known as "Sisa". This Tax is paid in the local Tax Office
nearest to the location of the property being purchased. The amount charged is
dependent upon the nature of the purchase and does vary. In certain cases the
buyer will be may be exempt from paying this Tax if the value of the "Escritura"
is below the figure of € 80,000.00. Below is shown a table for your guidance
based on a series of "platforms of sale value" and is applicable to all urban
purchases. All Rural properties are subject to a flat 5% Tax based on the "Escritura"
value. Any purchase in an Offshore Company is subject to a Tax of 15% applied to
the "Escritura" value.
IMPOSTO MUNICIPAL SOBRE TRANSMISSÕES Up to € 80.000.00 Tax = 0%
€ 80,000.00 up to € 110,000.00 Tax = 2%
€ 110,000.00 up to € 150,000.00 Tax = 5%
€ 150,000.00 up to € 250,000.00 Tax = 7%
€ 250,000.00 up to € 500,000.00 Tax = 8%
Over € 500,000.00 Tax = 6%
Then all the above requirements have been completed the act of sale can proceed
in any Notary Office. This act is known as the "Escritura de Compra e Venda"
which takes place in front of the selected Notary and is recorded in his
official books. The Notary will check prior to the act of sale that all the
necessary documents are correct to ensure that the sale can proceed according to
the facts provided. It is at this moment that payment is normally completed to
the seller, and when applicable, the balance of purchase has to be made
according to the signed Contract in Point 2 above. After the act is recorded the
Notary Office will issue a photocopy of the entry which is the proof to the
buyer that the act has officially taken place. The photocopy will carry the seal
of the Notary but as further official copies can be requested at any time this
document should not be mistaken for a "Title Deed"- as known in the UK.
In completion of the above act the property in question has then to be
registered in the new owners name in the Land Registry (Conservatória do Registo
Predial). This next registration is not obligatory until the owner wishes to
sell the property. However, it is strongly recommend that this registration is
made immediately after the Notary act as a preventative measure against a
possible financial abuse by the previous owner.
Buying Property Tips
Besides it's economy, Portugal is on of the best places in Europe to live.
Sunshine, sandy beaches, good fresh food, friendly people, and the least
polluted climate in Europe.
The "Tips" below are written purely as safeguards in order to avoid some of the
mistakes that a few people have made over the years.
In Portugal there are many methods available of finding and purchasing a
property. Many of them appear at first sight as potential shortcuts but later
they often cause added expenses to the buyer. These particular routes can be
likened to a "minefield" of opportunities for a potential purchaser to be
misled. It is obviously important to reduce to a minimum the chances of unwisely
parting with money.
It is prudent to only use a Real Estate Agent licensed by the Portuguese State.
The Real Estate Agents in Portugal are no different from elsewhere. There are
many good and helpful Agents and there are also the unscrupulous ones who find
anything justified to gain a sale. It is not difficult to discover the right Agents to use.
a) Printed information is available from sources outside Portugal. This
information should be treated with circumspect as it could be incorrect or out-of-date.
b) Outside Portugal many Agencies have been established as contacts to
seek potential local buyers. The information available from these Agencies are
often based on superficial knowledge of the laws and regulations.
c) Some countries have established mutual Chambers of Commerce, and when
approached they will supply a list of Agents who are there members. This list
can be used as a useful reference but it should not be taken as the true representation.
d) When you have chosen your area select one local agent, if more, than be careful.
e) Research the local reputation of each Agent.
f) A good Agent will first encourage the buyer to explain their needs in
some depth so as to advise and select properties correctly.
g) The time of an Agent is as valuable as the buyers - good Agents will
tend to show you properties that you can afford and that meet your needs.
h) Many Agents have past and present knowledge in regard to the history
to many properties and developments. This can be very valuable in the case of
re-sales as they will know the quality of the builder and what may be hidden
under the concrete.
i) As there are many aspects in purchasing a property, the good Agent
will assist you through all the necessary steps - he will also provide the
"after the sale" service that is always necessary in any foreign country with
j) Some friendly individuals are in most cases paid money by the seller
for the introduction that results in a sale of property. Most important of all -
if anything goes wrong these third party people have no legal responsibility in your purchase.
k) If anything goes wrong these people have no legal responsibility in your purchase
m) Lawyer's offices are often busy with clients with problems caused by a
decision to purchase a property directly from a seller without using an Agent,
or even worse, not using an experienced lawyer.
n) When choosing a Lawyer, Architect, Engineer, or Builder, it is
advisable to select from those names of people who are based and mainly work
within the geographical area in which a buyer's property is located. These
professional people should have well-established contacts in their local State
and Municipal offices that can be used to implement a chosen project or assist
in the making of a purchase.
o) In selecting who to use the advice of a Real Estate Agent should be
sought as it is in their best interests to recommend good people as they will be
probably dependant on these services to bring a sale or a project to a
p) When selecting a Lawyer for your conveyancing you will find that they
are all conversant with several languages, particularly English. Their fees can
vary according to the total value involved. A normal percentage for a middle
priced property is 3% as listed in their Table of Fees. In some cases it is
possible to negotiate for a lesser percentage but your final lower agreement may
end up related to the quality of the professional service received.
q) A lawyer will also be able to provide practical advice on all the
financial matters and costs relating to a intended purchase and carry out the
necessary searches. Be sure that your fully understand what the charges are and
what they will be doing for their fee. It is important to consider that every
country has its own manner of "doing things". A buyer become very frustrated by
trying to impose their own will, and not trying to bring their understanding
inline with the system that applies in Portugal. However, this does not act as
an excuse for inefficiency or misleading information.
r) It is advisable that any agreements between a client and an architect,
project manager, builder, or contracted supplier, must be in writing. Any
changes to the original agreement, however small, should also be placed on paper
and signed by both parties for later reference in case of possible conflict.
s) It is reasonable to state that the majority of older properties in the
Algarve have been architecturally changed over the years without the correct
documentary procedures being implemented. Garages have been turned into
bedrooms, terraces enclosed, extensions built. We recommend that a potential
buyer should see that the following two documents are checked in this respect.
Firstly, that the description on the "Caderneta" issued by the local Tax Office
(this is a form of Log Book), agrees with the physical aspects of the property.
Secondly, the plans as lodged in the Town Hall (Câmara) relating to the
construction area also agree with these physical aspects.
t) Please note that just as in other European countries there will be
annual "rates" to be paid to the Municipality and they are renamed from the
previous "Contribução Autárquica" to the new name of "Imposto Municipal Sobre
Imóveis - IMI". This change has also involved a new structure of lower Tax being
applied but against an updated value on every individual property. The new value
that will be placed on the property by the local Tax Office according to their
own internal valuations.
u) The final "Tip". By just using a intelligent approach and commonsense,
any purchase will become the same pleasurable experience as buying in your home
town. We cordially invite you to join the many thousands of other very happy
home owners in Portugal.